Oral Answers to Questions

Robert Key: Fallen service personnel are repatriated through Lyneham in the constituency of my hon. Friend the Member for North Wiltshire (Mr. Gray). The office and office staff, however, are in Salisbury. The retiring coroner said last week that he feared for the future of the coroner service in Wiltshire because a decision was made with no consultation to move the office and staff from Salisbury to Devizes, the excellent constituency of my right hon. and learned Friend the Member for Devizes (Mr. Ancram), who is in his place. The coroner fears that the expertise of those staff will be entirely lost. It is a complex and difficult situation involving relations with the military. Will the Minister undertake to look very closely at the future of the coroner service in Wiltshire to ensure that a service that serves the nation is no lost but, far from that, is enhanced?

Willie Rennie: Will the Minister join me in praising the work of the Fife Veterans Association, who do the sort of work that he described—voluntary work, promoting and standing up for veterans throughout the kingdom? The association does a splendid job promoting the rights of those veterans, and it deserves the support of the House and beyond.

Andrew Pelling: Following on from the Minister's welcome, does he feel that this is an opportunity to be able to work more closely and co-operatively with the People's Republic of China on defence matters in the African continent and the middle east as a whole?

Chris Mullin: Has not the time come to recognise that neither the British Government nor other EU Governments have any serious influence at all over the Israelis? We should recognise, as other Members have suggested, that these are war crimes that we are witnessing in Gaza, and start talking with our EU allies about organising sanctions and, at the very least, stop selling weapons to the Israelis, and perhaps about the withdrawal of our ambassador, because those are the only things that will make any impression on the people currently running Israel.

Michael Meacher: As this brutal and utterly disproportionate blood letting continues, will my right hon. Friend use all his influence in the EU as part of the Quartet to try to ensure that, whatever ceasefire agreement is finally reached, it is firmly linked to a further, wider process of negotiation aimed at securing a comprehensive peace treaty between the Arab states and Israel, as the Saudis themselves proposed in 2002; the withdrawal of all Israeli forces to pre-1967 borders; and the creation of a viable Palestinian state, without which there will be no end to this century-long conflict between the Arab states and Israel. What contact has my right hon. Friend had with President-elect Obama or his team to secure those ends?

Business Rate Supplements Bill

[ Relevant Documents:  The Seventh Report from the Communities and Local Government Committee, Session 2006-07, Local Government Finance: Supplementary Business Rate, HC 719; and the Third Report from the Committee, Session 2007-08, Local Government Finance — Supplementary Business Rate: the Government's response, HC 210, and the Government's response, HC 1200, Session 2007-08, are relevant. ]
	 Second Reading

Andrew Pelling: I want to support the hon. Member for Croydon, South (Richard Ottaway). Does the Minister not accept that it is a facet of London politics that a London authority inevitably means a transfer of resources away from rather poor suburbs such as Croydon to projects in the centre or east of London? Would the Minister be willing to follow the Select Committee's recommendation that boroughs should have some kind of veto so that they can address the issue of the continued transfer of money away from south London to other parts of London, which further taxation through the GLA will inevitably involve

Bob Neill: I beg to move an amendment, to leave out from "That" to the end of the Question and add:
	"this House declines to give a Second Reading to the Business Rate Supplements Bill because supplementary rates threaten to become another local stealth tax at a time of economic downturn; because local firms should have a vote on any supplementary rate, as already occurs with Business Improvement Districts; because cuts to the Local Authority Business Growth Incentive Scheme will put pressure on councils to levy the supplementary rate; because the proposed exemption threshold for small business will be far less generous following the 2010 revaluation; because the Bill does not address the problems that local firms are suffering as a result of the Government's business rate rises on empty property and retrospective increases in rates levied on business in the registered ports; and because the Bill fails to limit the application of supplementary business rates to the Greater London Authority and the Crossrail project.
	In moving the amendment in the name of my right hon. Friend the Member for Witney (Mr. Cameron) and others, I congratulate the Minister on the one thing that is always held in his favour: he is a man capable of being very reasonable. In this Government, the ability to say outrageous things reasonably is, of course, a valuable commodity, so I quite understand the right hon. Gentleman's valued presence on the Government Front Bench. If he will forgive me for saying so, when it comes to outrageous statements of 2009 so far, the idea that the Bill deals not with a tax but only with a power to levy a tax is a pretty good kick-off. Here is a new conundrum with which children can be entertained over the Christmas period: "When is a tax not a tax? When it is a power to have a tax." Dry old lawyers such as me used to have a saying—"agreement for a lease is as good as a lease" and there was good sense in that, because that was the reality. A power to levy a tax is, in practice, a tax—and that is the reality. With every respect to the Minister's competent performance in defending the indefensible, let us at least be honest about what is happening.
	I understand, of course, the reasons behind the desire to examine how local government finance is approached. There is the whole background of the Lyons report and there is a sense in which we should genuinely seek to give local authorities an incentive to encourage economic development in their areas. Two points arise, however. If the Minister will forgive me, it might be thought that that does not happen at the moment, but in fact it does. Local authorities—Essex was mentioned earlier and there are many other examples—are already busy using a raft of powers and are encouraging economic development by means of brokerage, encouragement, effective use of planning powers and so forth, but there is no need to provide for tax-raising powers to go along with them.
	Secondly, the Lyons review spoke of flexibility in raising business rates in a number of ways. Not for the first time in relation to Lyons, the Government have rather cherry-picked what best suits their own purposes. We may remember that at the beginning of this argument, suggestions were made of flexibility either way. The Government—let there be no mistake that this is a Treasury-driven measure—have chosen a form of flexibility that goes only in one direction: the ability to raise a tax, but not to reduce the business rate, as was mooted at one point. They are making selective use of the arguments. Furthermore, the Government have ignored the point made throughout the Lyons report and, indeed, in the subsequent White Paper—that it was necessary for business to have a real say in any such proposals.
	If the Minister will forgive me for referring to another interesting phrase of the year so far, "compulsory consultation" is not the same as having a right to vote. If anyone thinks that compulsory consultation can prevent people's rights from being ignored, they should think about the previous Mayor of London and the introduction of the western extension to the congestion charge, where a compulsory consultation was required by Act of Parliament. The Mayor carried it out; the majority said that they did not want it, yet the Mayor ignored them. That shows the value of such "compulsory consultation". Whatever the intentions, rather than encouraging closer partnership between local authorities and business, which happens in the best run authorities, there is a real danger of driving a wedge between local authorities and business, which will be sad and damaging in the long term.

Bob Neill: I understand my hon. Friend's point, but, with respect, may I say that I suspect it would be more appropriate to address the question to the Minister than to me? Currently, the provisions simply give power to upper-tier authorities and do not specify which. I should point out to my hon. Friend that the Bill contains a clause that would enable upper-tier authorities to levy a business rate supplement jointly, but he would have to ask the Minister about that. Perhaps we will be able to return to that point when we examine the details of the relevant clause, where safeguards are not properly addressed.
	Another point advanced in favour of the Bill is that it provides additional money, and my intervention hinted at the issue that I take with the Minister about that. If the Government are serious about making additional money available for economic development by local authorities, it is extraordinary that they almost strangled the local authority business growth incentives—LABGI—scheme at birth by cutting its funding so drastically. The LABGI scheme was not perfect, but it edged in the direction of giving a greater incentive to local authorities to attract business to their areas. The funding was cut from £1 billion over the first three years to £150 million in the following three. In effect, the Treasury—yet again the villain of the piece—is taking moneys from local economic development and by sleight of hand, in the form of this Bill, shifting the burden for economic development on to businesses and their customers and employees.
	The Treasury has used that trick repeatedly under this Administration. May I give one other London-based example in that regard? Interestingly, when the opportunity for the Mayor of London to levy a congestion charge was first introduced under the Greater London Authority Act 1999 an assessment was made of the likely take of the congestion charge—it did not turn out to be terribly accurate, but that was consistent with most of the other things in the assessments at that time. Lo and behold, the following year the central Government grant to Transport for London was reduced by an amount that was almost exactly the same as the projected take of the congestion charge revenue. The truth is that the Government have form for this, and they are robbing shopkeeper, businessman Peter to pay the Treasury's Paul.
	I hope hon. Members forgive my saying so, but there is no credibility to the suggestion that this measure will attract additional money. The points outlined by a number of my hon. Friends in interventions were well made. I can understand why local authorities have been interested in the ability to use such a power—I do not blame them—but one of the reasons they are interested is precisely because they are being put under enormous pressure by central Government. Local authorities have had a range of unfunded obligations placed on them in recent years, they have been given a range of ungenerous, rather tight financial settlements and they have seen the LABGI scheme funding slashed—no wonder they are under pressure to seize any opportunity that they can. In a sense, the Minister is setting up local authorities to be his human shield against criticism—he is pushing them into the front line and saying they want this, when it is almost being done with a financial gun to their heads. That is the reality, and the suggestion being made does not have much credibility.
	A third point is that the suggestion has been made that the Bill will give local businesses a stake and a real say. Here is a separate point that the Bill simply fails to address in terms of its own original prospectus. I was having a look at some of the phrases used in the White Paper. Benefits were suggested as including devolved decision making, because resources would be raised and controlled locally and those who have a stake in the success of a scheme and the best understanding of what is needed would be running it. That will not be the case, because the people who have the best understanding and the most at stake are the local businesses and they are not going to have a ballot on this in all cases. Neither is there any provision in the Bill to give those local businesses that contribute an ongoing overview of the implementation and working through of the scheme. In fact, their say is limited, because the compulsory consultation can be ignored. That issue could be addressed—every business group that made representations suggested this—by requiring a ballot in all cases. I hope that the Minister will reflect on that, because if there is to be genuine partnership, there must be good will on the part of local authorities, and that can be achieved.
	The Minister rightly said, as did my hon. Friend the Member for Cities of London and Westminster (Mr. Field) and others in interventions, that business improvement districts are a good model for that. I have had the opportunity to talk to several people who run successful business improvement schemes. I recently met Dame Judith Mayhew Jonas, who is leading a successful scheme in a new west end company in my hon. Friend's constituency. The point that was made by everyone involved in the BID schemes is that they work because there is genuine buy-in from businesses and a real incentive for everyone to succeed. Why not adopt that model with the compulsory ballots?

Nick Raynsford: No, I will not, for precisely the reason that the hon. Gentleman mentions: we are talking about a proposal that is far more wide-ranging than the BIDs, which have a narrow, local focus. As he will have heard in my exchange with the hon. Member for Bromley and Chislehurst (Robert Neill), the Front-Bench spokesman, not every business has a vote on BIDs. The landowners do not have a vote. Many people saw that as a potential weakness in the BID mechanism, but we regarded it as necessary, because it would have been a huge complication to create an electoral register for freeholders and landowners that is separate from that for tenants, who are liable to pay the business rate. To avoid unnecessary bureaucracy and complication, we did not extend a voting right to freeholders. So in the case of BIDs, not every business has a vote.
	We should think about the purpose of the initiative. If it is meant to secure the support of business for major infrastructure schemes, it is vital, first, that there is a framework to ensure that support and, secondly, that it cannot be prevented from operating by the activities of businesses that do not see the benefits. We have heard the view of the hon. Member for Croydon, South (Richard Ottaway), who is no longer in the Chamber; he did not see what benefits small businesses in Croydon would gain from Crossrail. He is wrong, because businesses in Croydon will benefit substantially from Crossrail, which has conducted a detailed survey of the economic benefits resulting from improved journey times and greater access to commercial premises and of all sorts of other benefits from improved transport. It demonstrated significant economic benefits in all parts of London—including areas such as Croydon, which would be some distance from the nearest Crossrail station—as London's transport network is an integrated whole. When part of that network does not function, the consequences spread across the whole city. There are benefits, even in Croydon, and as my right hon. Friend the Minister made clear, small businesses will be exempt. The supplements will apply only to businesses above the threshold, which we think will be set at the rateable value of £50,000, although that has not yet been confirmed in the Bill.
	The risk of a universal ballot by businesses outside the area immediately affected by the infrastructure investment, which could destroy the huge benefits for those businesses that are more familiar with the scheme in the area where it will be constructed, could prevent necessary improvements. However, I stress that there are safeguards. First, schemes where less than a third of its cost is met by business will not be subject to a ballot. In any case in which business is expected to meet the majority or a significant proportion of the cost, if the cost is less than 50 per cent. but more than a third, businesses will have a ballot, which is a fair safeguard. Secondly, as we know from the Crossrail experience, the measure would not command the support of business if business in London did not believe that it was a good thing. Even without holding a vote, business representatives in London—the CBI, London First and the chamber of commerce—all know how crucial Crossrail is to the future of our city. That is why there is extensive business support for the concept of a business supplement.
	This is important because, as Opposition Members know only too well, Crossrail has been a long time a-coming. The scheme—the hon. Member for Bromley and Chislehurst made this point—has been in gestation for 20 years or more. I remind the hon. Gentleman that when his party was in government, the scheme fell. His party introduced a Bill in the early 1990s to create a Crossrail scheme, but it did not get through the House, not because of the activities of Labour Members but primarily as a result of the stance of the Conservative Chairman of the Select Committee that looked at the scheme. Perhaps that is a comment on part of the Opposition's past to which they do not want to return or of which they do not want to be reminded, but that was the shambles of the hon. Gentleman's Government in the 1990s, and that was the reason why the Crossrail scheme did not proceed.
	Without a sound, broad funding base, which is now in place, I do not think that Crossrail would proceed even now. It is difficult to see where the funding would come from to enable it to happen if it were a wholly publicly funded scheme without an element of business contribution. It is fundamental if we are to enable a scheme such as Crossrail to proceed that we have the option for that type of joint partnership funding for major infrastructure schemes. Under the Crossrail formula, funding will come partly from central Government, and it is right that they should contribute; partly from the Greater London authority, and it is right that there should be a GLA contribution; partly from the users of the service through the fare box, which has been taken into account in the financial formula; and, crucially, from business.
	The business contributions are not uniform. There are two separate types of business contribution. There is the direct contribution of those businesses that have premises or development sites in the immediate locality of a new Crossrail station, which stand to benefit enormously from the creation of the new transport links. I think of Berkeley Homes in my constituency which is carrying out an important new development on the Royal Arsenal in Woolwich—a major regeneration project that is rightly attracting a great deal of support, plaudits and awards, because it has transformed a formerly derelict site into an area with real prospects in the next two decades of becoming one of the great locations not just for residential premises but for businesses.
	Businesses recognise the huge benefits that will come to them from having a Crossrail station in Woolwich and they are contributing towards the cost of that station. That is a direct contribution. There are similar contributions at Canary Wharf from the City of London and elsewhere. That direct contribution is an element, but other businesses not so closely connected to the areas where there will be stations will benefit for the reasons that I referred to in the study that Crossrail carried out into the wider economic benefits. It is right that above the threshold—a £50,000 rateable value threshold seems a reasonable one—there should be a contribution from business towards something that will unquestionably improve the economy of London and the prospects for London businesses. That is the nub of the argument in favour of the type of mechanism that the Bill represents.
	I heard the hon. Member for Bromley and Chislehurst saying, "Well, yes, we understand that Crossrail is quite a good idea." He is bound to say that, because his own Mayor of London, Mayor Johnson, is a very strong advocate and rightly so. The hon. Gentleman would be in an impossible position if he were cutting Boris off at the legs by saying, "No, we don't support this." He has had to get himself into the curious position of saying, "We don't really like the Bill"—the tone of the contributions that we have heard today from the Opposition has been hostile—"but okay, we accept it for Crossrail."
	That is intellectually incoherent. Why should London benefit from the Bill and no other part of the country have the benefit? If in any other part of Britain a major infrastructure scheme is developed that has the support of the business community because it believes that the scheme is crucial to economic success, why should it not have the option? We heard no answer to that question. To say that the Bill is acceptable in London on a major project such as Crossrail but nowhere else is incoherent and non-credible.
	This new business rate supplement scheme is fundamental to the economic well-being of our country and there could be no better time than the present for it to be introduced. To argue that this is an inappropriate time is extraordinary. In the next week or so we will see the inauguration of a new President of the United States, which many in all parts of the House welcome. He will be clearly committed to major action, including major infrastructure investment to tackle the current economic difficulties that that country, along with the rest of the world, is facing. We know perfectly well from history what an important role major infrastructure investment played in the 1930s in attacking the problems of the great depression.
	It seems an extraordinary position at this point in time to try to prevent a scheme from being put in place that will benefit the economy, that can command the support of local business and that is subject to loads of safeguards against measures being imposed on business. That reinforces the view that the Conservative party does not know what to do and so is doing nothing, as against a Government who are determined to take the action necessary to tackle and respond to the challenges of our time. If the Opposition continue in their incoherent, intellectually bankrupt position of saying, "Yes, the Bill is all right for Crossrail, but nowhere else in the country, and we don't like it," they will be seen as the party doing nothing at a time when the country deserves better. I sincerely hope that the Bill receives a solid Second Reading tonight.

Paul Farrelly: I want to give general support to the Bill, which advances modest reforms to the uniform business rates regime that has been run nationally since its introduction with the ill-fated poll tax 1990. The poll tax—I am sorry to mention it twice in two sentences—was swiftly replaced, but this small amount of discretion locally to tinker with business rates has been a long time coming. Importantly, it is not mandatory—no council will be forced to implement a business rate supplements scheme. It also gives local businesses a strong voice in the introduction of any such scheme and over the projects for which any funds raised are earmarked.
	That said, I have concerns about the operation of the business rate regime that I hope to highlight with specific examples after these short opening remarks. I promise that I am not going to mention Boris, London or Crossrail. I want to deal with some of the potential benefits outside the capital, but also some of the flaws in the current system that assist abuse. In short, I want to talk about some of the good intentions in the Bill, but also some of the bad apples out there abusing the system. That issue should be addressed with further reforms, possibly as the Bill goes through the House.
	In my area of Newcastle-under-Lyme and north Staffordshire, one of the biggest challenges that we face is economic regeneration in a traditional manufacturing and former coalmining area. It will not have escaped the notice of any hon. Member—not least the hon. Member for Lichfield (Michael Fabricant) and my hon. Friend the Member for Stoke-on-Trent, South (Mr. Flello), who are both here—that last week, on practically the first working day of the year, Waterford Wedgwood, one of north Staffordshire's biggest and most renowned employers, went into receivership. Indeed, Wedgwood's employees are today expecting to learn their fate. Like my colleagues locally, I am in touch with Government Departments, agencies and our local Potteries trade union, Unity—its general secretary, Geoff Bagnall, its deputy general secretary, Garry Oakes, and officers in particular—to see what help and advice can be offered.
	In Newcastle-under-Lyme, large swathes of land, particularly around the central ring road, are awaiting development. As in other towns across the country, how they are developed will determine not only the economic future of the town but how it looks and feels for the foreseeable future. The issue of land acquisition by the public sector has been one of the key stumbling blocks to joined-up regeneration in our area for many years. A business rate supplements scheme might provide useful extra funding—an additional tool in the armoury, as it were—to make the town more the master of its own future. Public land acquisition would help to safeguard against speculative developers playing the planning system, cajoling local councillors and getting away with poor design, especially as the siren calls of "Any development is welcome development" will only grow stronger during a downturn. In my area, it may well prove popular with local traders and property owners in a traditional market town that is under threat of further huge supermarket developments right round the town centre, not only on the edges of the town.
	Together with a coherent local plan, having more wherewithal for public ownership of key sites would act as a bulwark against—or perhaps provide a backbone for—weak, old-fashioned, unimaginative, unambitious or simply perverse planning officers who cave in too easily. That happened yet again in Newcastle before Christmas. Our head of development control, who goes largely unsupervised in a dysfunctional planning department, almost single-handedly pulled the rug from under the feet of councillors, his planning colleagues and experts from Urban Vision North Staffordshire, our local architecture and design centre, by recommending the approval of a Lidl discount store and budget Travelodge hotel, right in the town centre, against all expert opinion and emerging site guidance. Had the site been in public ownership, that could have been resisted. That failure is ultimately political and managerial at the highest level of the council. However, there is no doubt that if these sites were in public hands, in Newcastle-under-Lyme, as in many towns and cities up and down the land, we would be more masters of our own fate.
	As in many other areas, housing is another example of major concern where a business rate supplements scheme may well have a part to play in well thought out projects to revitalise the economic fortunes of town centres, in particular. Again before Christmas, representatives from our registered social landlord, Aspire Housing in Newcastle, informed me almost lackadaisically, in a meeting about a totally separate matter, that they did not see the building of new social housing as part of their so-called core business any more. Newcastle alone has a waiting list of 3,000 for social housing. We have regional and sub-regional targets for house building aimed particularly at encouraging town and city-centre living in Newcastle and Stoke-on-Trent. Aspire Housing owns all Newcastle's former council housing stock. If it does not intend to build social housing beyond schemes already in the works, it is hard to see who will, especially at this point in the economic cycle. Frankly, that is a dereliction of duty that I am pursuing with it vigorously. However, it is another example of a development, coupled with key public site acquisition, which meets a need, which might make town centres more sustainable, and which otherwise would not happen, where a BRS scheme might have a role to play and local businesses may well support it in their own interests.
	In that respect, I discussed with my local council the option of a business improvement district—an idea introduced by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), the former Minister—that would be backed by regeneration agencies to help to revitalise the town centre. A business rate supplement scheme, as provided for by the Bill, would allow for a further alternative in co-operation with local businesses. It is absolutely inconceivable in places such as Newcastle-under-Lyme and north Staffordshire that anything would be implemented without such co-operation or against the interests of local business.
	When I refer to local business, I am talking about the vast majority of local employers and traders, as well as national firms and store chains, which are socially responsible and pay their taxes and business rates. However, in Newcastle and north Staffordshire, as in other areas, there is a small minority of unscrupulous so-called business people who do not. They let other suppliers and creditors suffer, as well as the taxman, local councils and the Government's business rate pool. I am not talking about entrepreneurs who genuinely set up firms and take risks that do not work out in a free market, or about businesses, of which there will be a growing number in the recession, which find they cannot cover their costs and have to close. I am referring to a small minority of parasites, frankly, who have no intention of paying their dues from the outset and who hide behind limited liability and deliberately play the system to avoid business rates.
	I hope, therefore, that any change to the business rates system, such as the provisions of the Bill, will contain measures to address flaws in the current regime. First, breaking the link between local collection and the ability to spend business rates locally gives councils such as mine little financial incentive to pursue serial evaders seriously. After the passage of the Bill, even if councils set up a business rate supplement scheme, they will still be collecting agents for central Government for the vast proportion of business rates and, importantly, they will not suffer financial loss for any lack of rigour in tackling evaders. Secondly, many of the people in question serially go bust and leave little or nothing by way of assets because they do not own the properties from which they trade, or because they have hived them off into separate companies or trusts. Business rates will still be collected from the operators of business premises and not from the owners or landlords—a point that has been made by Members in all parts of the House. Reforming that process would aid collection from such evaders and I urge the Government to consider addressing the issue in the Bill, or in further reforms to the system. Thirdly, on the detail of a business rate supplement scheme, I and honest traders in my town have serious concerns about how consultation and balloting arrangements in the Bill—or any subsequent regulations—would cater for evaders. Put simply, they do not operate on a level playing field, so why should they have a voice or a vote, and how could such a situation be prevented? Such details need to be discussed.
	I shall illustrate those concerns with a specific example from my area, to give them meaning. We in north Staffordshire are by no means alone in suffering from the actions of such people, but there is one particularly shocking case that I have taken the time and trouble to investigate and pursue over the last nine months as the local Member of Parliament. In the past three years, business rates written off by Newcastle-under-Lyme borough council have more than doubled from £195,000 in 2005-06 to nearly £420,000 in 2007-08. That is a substantial amount for any second-tier authority, and had the borough council collected it and been able to spend it locally—or not—the effect on the council tax would have been enormous. The council has lost a serious amount of money. Those figures dwarf the amount of council tax write-offs from ordinary taxpayers. In March 2007, for instance, £252,000 was written off in business rates for the financial year, which was almost 10 times the amount due from council taxpayers that was eventually written off. Sadly, the council, like many throughout the country, tries to keep those figures secret. It should not. The public have a right to know how the system is operating, and it is perfectly possible for councils to be more robust by shaming serial offenders as a discouragement to others tempted to do the same who give towns such as mine a bad name in business.
	I come to the worst example that I have found locally. In March last year, the borough cabinet—behind closed doors again—wrote off more than £13,000 owed by a firm running the Albion public house in Newcastle town centre. The Albion is an old pub—coincidentally, my uncle's mother and father-in-law used to keep it when I was growing up. This was the fourth time in four years that the council wrote off its business rates, and for four different pub operating companies that went into liquidation. The owners and directors of the companies were the same: two local characters called Anthony William James and Peter Andrew Whieldon. Piecing together all their companies' affairs from Companies House and liquidators' reports, one finds that the track record of serial insolvencies and non-payment from their numerous pub companies since 2003 runs as follows: more than £47,000 in business rates was written off by Newcastle-under-Lyme borough council, another £57,000 in business rates was owed to Stoke-on-Trent city council, and at least £184,000 in VAT, tax and unpaid national insurance was owed to Her Majesty's Revenue and Customs. In all, their failed companies have left a trail of £1.3 million in unpaid debts across the Potteries, but they are still in business and, by all accounts, they have never had it so good.
	I am not making a political point, but what makes the case particularly shocking is that Peter Whieldon, one of the co-owners, is a local Conservative borough councillor. Until I pursued that track record, he was vice-chairman of Newcastle-under-Lyme council's financial audit and risk sub-committee. He is still the treasurer of the local Conservative association. His current companies run at least three pubs in Newcastle, and others in Stoke-on-Trent, which make people's lives a misery in town on Saturdays by showing live Stoke City matches, accessing dodgy satellite signals aimed at Scandinavia and elsewhere. They are doing a thriving trade, but to add injury to insult, the resulting antisocial behaviour causes some traders who pay their business rates to shut up shop early and lose business. As well as football's premier league, the police have serious concerns.
	On business rates, I want to stress that the present regime provides no incentive financially to a local council that shows no determination—as a matter of good practice or, as in this case, to uphold civic values—to pursue such serial evaders seriously. The council as a collector for the Government suffers no financial loss. The premises in question were not owned by the companies liable to pay the business rates. The freehold of the Albion pub, for instance, is owned by Marston's. When the companies go bust—surprise, surprise—the landlord, and main drinks supplier, does not appear on the list of creditors. Either the landlord is very prescient, or that is prima facie evidence of preferential treatment of a key creditor and of tolerance of dubious business practices over quite a number of years, which can only detract from a reputable brewery's standing in the community.
	If the business rates regime allowed councils to collect business rates from the actual owners of properties—either generally or in the special circumstances that I have outlined—the opportunity for evasion would be much more limited. I encourage the Government to consider such a reform during the passage of the Bill. Locally, we pursued the council over the affair after receiving many complaints from the public and local businesses A letter was sent last April, for instance, to the Conservative leader of the council, Simon Tagg, to ask not just why the council always wraps itself in so much secrecy, but what straightforward measures the council had taken to protect itself and the Government's business rate pool, given the track record, by means such as not allowing rates to build up over a year but instead demanding them up front or in instalments, which is the case for ordinary council tax payers The leader replied that existing legislation does not allow the council to do that. He also wrote:
	"The Council's finance department cannot take account of 'previous bad history' when issuing demands because they have to treat each financial year separately."
	That defies common sense and any good business practice, and I would like to hear from the Government whether that advice, no doubt given to the leader by his officials, is correct. If not, I will further pursue the matter locally. If it is correct, I would urge the Government to amend the Bill to give councils common-sense flexibility in how they pursue such cases.
	I have written at length several times to the council's relatively new chief executive, Mark Barrow, who has been in post for about 18 months now. The first time was in April, when I pieced together the track record. I wrote again in June and again at the end of July after receiving no substantive reply. I am afraid that at that point, for the first time as a Member of Parliament, I invoked the Freedom of Information Act, but pretty much to no avail. Apart from general procedural details about the new standards procedure for local councils, which I knew about by that stage, I received no answer to specific questions and heard no more. I wrote again on 4 December, expressing grave disappointment and again citing the Freedom of Information Act. This time I received a two-line acknowledgment, dated 8 December, from the council's freedom of information co-ordinator, promising me a response about the business rates within the statutory deadline of 20 working days As of today, 12 January, there is still a resounding silence from my council and its chief executive over the affair.
	The point that I wish to make about the reform of the business rates regime is that if such things are happening in my area, they are happening up and down the land to the detriment of government, councils, council tax payers and honest business rate payers. There is some local evidence that the more widely such behaviour becomes known—traders talk to each other all the time—the more others follow suit, either just because they can or because they cannot otherwise compete on a level playing field. Have the Government calculated the total cost of business rate write-offs each year, and have they commissioned any studies to estimate how further reforms such as those I have suggested may help to reduce that amount, to the benefit of everybody across the country?
	Councils could either be helped by being able to levy business rates on the owner of a business property, or they could be given specific duties to pursue serial evaders, with financial penalties on councils as an incentive. That would apply particularly to councils such as Newcastle, which has hardly pursued with zeal the affair that I have mentioned or complied with its statutory duties under FOI legislation. If that is the frustrated complaint of the local MP, what chance do ordinary local council tax payers and honest businesses have of ensuring that the business rates system operates fairly?
	I shall draw my remarks to a conclusion by discussing openness. A further reform should involve a duty on councils to be transparent about write-offs and the non-collection of business rates in general. In the case that I mentioned, the council's standards committee has now considered a complaint against Councillor Whieldon, concluded that there is a case to answer and appointed an investigator. However, that has all been done behind closed doors. Nothing has been said in public, and nine months on I have not been contacted. I hope that the review has not been set up to clear the council and to whitewash the procedures that it adopted.
	One of the more farcical elements of the case is that the only thing that has been made public is an investigation into how the information came into the possession of a Member of Parliament—a leak inquiry into myself. As part of that investigation, last July the council reviewed its policy of writing off business rates in secret and gagging cabinet members and ordinary councillors from saying anything to anybody, even in the public interest. In a paper to its cabinet, the council surveyed the policies of nine councils in Staffordshire and labelled them—

Mark Prisk: This has been an interesting, if somewhat short, debate, and it is a shame that only two Members from the Government party were able to join us this evening to contribute—I am sure that others might have been able to make a contribution. It is good to welcome the Ministers back to their places to be able to contribute at least to the end of the debate.
	The Minister for Local Government, who has just returned, set out the case in his characteristically cautious, but always reasonable manner. He and I had the fortunate—or otherwise, depending on how one describes this—opportunity to debate stamp duty land tax at some length; I am pleased to say that I get out more often now. He showed his ability to do an extraordinary turn at heel when displaying new Labour doublespeak. He started off with the old gag that a power to tax is not a tax—I particularly enjoyed that. When asked why the Government were cutting a particular initiative, he told us that it was not a cut—they were merely building it into the rates system. He then surpassed himself, because just for a moment, when using the deadpan manner that he uses when telling something that he knows is palpably incorrect—perhaps I should put it that way—a glimmer appeared at the edge of his lips as he told us that this Prime Minister and this Government have at their heart the belief in decentralising power. We all know that the reality is somewhat different; I could use many words to describe the Prime Minister, but "decentralising" would not be one of them.
	Business will be concerned that, when questioned, the Minister for Local Government refused to agree to ballots for all supplementary business rates. That is on the record, and businesses will note it. He also admitted when questioned that empty properties face an additional levy under this Bill, despite the impact that that could have at this time. Only Labour could charge 102 per cent. on empty business properties in a recession.
	We subsequently heard an excellent contribution from my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), who set out how the original principles have been lost in the Bill, how flexibility has been replaced with a rigid tax-raising scheme and how simplicity has been replaced with complexity. He also rightly spoke about the danger of removing ballots or not permitting ballots for all schemes. We want business and local authorities to work together, and the danger of this Bill is that it will merely divide those two camps. He also contrasted the words of the Prime Minister with the actions of his Government. This morning, the Prime Minister talked about jobs, yet this afternoon his Government are introducing a new tax on employers—we intend to highlight that contrast.
	We heard an excellent and knowledgeable contribution from the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), although it was somewhat short for him. At the beginning, he tried to pretend that the Conservatives are adamantly opposed to Crossrail, although he knows that to be untrue—I see him smiling on the Benches opposite. He was eloquent about the business improvement districts scheme—rightly so, for he introduced it. I differ with him in that I do not think that the scheme before us will engender that strengthened relationship between business and councils. I suspect that is where his argument falls down, but it was an excellent bid for a return to ministerial office, and we look forward to his coming to the Dispatch Box in due course.
	The hon. Member for North Cornwall (Dan Rogerson), who speaks for the Liberal Democrats, set out why his party will support the Bill. I was intrigued by the fact that the position may conflict with that of his colleague, Lord Cotter, who speaks for the Liberal Democrats in the Lords:
	"It does not seem to be a good time to introduce an additional cost for businesses that are struggling to survive in a time of economic crisis."—[ Official Report, House of Lords, 8 December 2008; Vol. 706, c. 222.]
	I agree with the noble Lord, but I am disappointed that Liberal Democrat Members are confused.
	We then had a wide-ranging contribution from the hon. Member for Newcastle-under-Lyme (Paul Farrelly), which was mostly about business rates arrears and an interesting press release that attacked the local council. I have no doubt that Ministers look forward to his contribution in Committee.
	We then had four strong contributions from Conservative Members: my hon. Friends the Members for Northampton, South (Mr. Binley), for Ilford, North (Mr. Scott), for Cities of London and Westminster (Mr. Field) and for Cotswold (Mr. Clifton-Brown). My hon. Friend the Member for Northampton, South spoke with his characteristic passion. He gave us the full economic context—perhaps a little fuller than you liked, Madam Deputy Speaker. In the broad range of issues, he highlighted and rightly contrasted the way in which the Government say one thing and do another. I hope that he keeps banging that drum—I am sure that he will—in the weeks and months to come.
	My hon. Friend the Member for Ilford, North spoke strongly in favour of Crossrail, which will benefit Ilford and much of east London. He also made a powerful point: consultation and ballots are not the same. I see the Minister nodding in agreement, and I hope that he will say so on the record.
	My good and hon. Friend the Member for Cities of London and Westminster made, as expected, a knowledgeable contribution He gave the history of how such infrastructure projects need to be funded, and the underlying dilemmas. He explained the difficulty of quantifying benefits for businesses and why the matter needs to be handled with such care. That is the line that we want to take.
	Last, but by no means least, my hon. Friend the Member for Cotswold made a powerful contribution. Like me, he is a chartered surveyor, and he brought his knowledge of surveying to the debate, as well as a powerful exposition of the weakness of the Government's arguments. He highlighted the fact that many of the key elements are not in the Bill, but will be revealed later, dripping through the legislative system when we can challenge them only more weakly.
	The core of this debate and the origin of the measure lie, as hon. Members have said, in the Lyons inquiry into local government finance. It highlighted the need for local authorities to have a more flexible way of raising supplemental revenue for local economic development. Several hon. Members pointed out that the inquiry emphasised that
	"local supplementary powers should be designed in a way which can gain credibility with business and the wider community."
	That is where the Bill's weakness lies. The Government's White Paper followed in October 2007 and set out the key features of a new business rate supplement. They were to include a limit on the rate in the pound, the need for businesses to be balloted, although only in limited cases, and the exemption of businesses whose rateable value falls below £50,000. Those elements remain in the Bill.
	Alongside that has been the need to progress the Crossrail scheme. Indeed, a business rate supplement in London will be used to part-finance the expected £16 billion cost of Crossrail. We welcome and support Crossrail, not least because it will enable us to link our capital's rail network and help to reduce the pressure on an already overcrowded tube network. However, it is not unreasonable for many London businesses to question the cost. After all, much of the revenue to be raised is likely to come from businesses in boroughs such as Westminster, the City and Hillingdon, where the specific benefit to each firm will be extremely difficult to show. There is evidence for direct and indirect benefits but hon. Members must understand that it is not wrong to raise those concerns, because those are the people who pay not just our salaries, but those of the public sector as a whole.
	That leads me to one of the key points in this debate. Business rates have long been resented by firms because they are taxation without representation. That charge is raised from entities that do not have a vote. The owner may vote and the staff may vote, but the firm—the payer of the tax—has no vote. If businesses receive nothing specific in return, they understandably question the fairness of the levy. That is why changes to business rates must be handled carefully. The Lyons inquiry said that the rules covering business improvement districts, for example, have been credible to the business community, because they specifically require a majority of the affected tax-paying businesses must agree to the additional charge. Conservative Members support that approach.
	The Bill is fundamentally flawed because it seeks to permit a supplementary rate to be charged, but requires a ballot only in certain circumstances. Under clause 7, a ballot must be held only when the amount raised accounts for more than one third of the estimated costs. Councils may hold ballots in other circumstances, but they are not obliged to do so. That is the problem. There should be a vote on any proposed supplementary rate with no ifs or buts.
	Issues arise about costs, not least the fact that they could range from £319 million a year to £600 million a year. It would help if the Minister clarified the basis on which those estimates were made. After all, they come at a difficult economic time when output is falling, unemployment is rising and the economy in this country is contracting faster than in any of our G7 competitor nations. The result is a squeeze on small businesses, which is why so many business organisations are worried about the measure. Perhaps the Minister will tell us how many jobs could be lost as a result of introducing the measure now. What is the Government's estimate of the number of jobs that will be affected by the extra charge?
	The impact of the measure could be affected severely by the rates revaluation planned for next year. It will be based not on 2010 values, but on values at 1 April last year. Hon. Members will realise that that creates two serious problems. First, many firms will face big rises in rates bills, just when they can ill afford them. Secondly, the revaluation will push many firms that are below the £50,000 threshold into paying the new charge. Implementing the levy now will deliver a double whammy to many small and medium-sized firms. The question for us is, why is it right that in the next year those businesses must pay more on their main rates bills and more on their supplementary rates bill?
	In conclusion, there is a case for businesses to contribute to infrastructure projects from which they benefit. Clearly, businesses throughout London will benefit from Crossrail and a radically improved rail service. However, the Bill is fundamentally flawed. A measure that should be flexible and accountable has been turned into a rigid tax rise that is needlessly complex and highly undemocratic. At a time of recession, it threatens not to help economic development but to burden hard-pressed employers. At a time when firms need fewer regulations, it introduces more red tape. At a time when we should be encouraging councils and businesses to work together, the Bill threatens to divide them. For all those reasons, the Bill is a missed opportunity that businesses and their workers can ill afford.

Sadiq Khan: The hon. Gentleman has had plenty of time to wind us all up; I would like to wind up the debate.
	As my right hon. Friend the Minister for Local Government explained in his introduction, we are committed to doing what we can to help people through these tough times. At the same time, we need to look to the future and to prepare for the upturn in the economy. The business rate supplement should not be stalled by short-term concerns. The Bill does not propose a new duty on local authorities to levy a supplement. Instead, it provides a new discretionary power for local authorities to raise revenue to invest in local projects aimed at promoting economic development when the time is right. As the Bill is drafted, a business rate supplement will apply equally across the entire area on the basis that projects should benefit whole areas.
	I shall now go on to address some of the points raised by hon. Members during the debate. The hon. Member for Bromley and Chislehurst (Robert Neill) moved the amendment and he had a lot of time over Christmas to think of it. It is a Christmas tree amendment. The only thing missing from it is the kitchen sink. He was his normal, amusing self and we hope that he keeps his job in the imminent reshuffle. I was not clear whether he was calling the Bill BRS or BS—I know that we think that it is an important Bill that will have many benefits.
	My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) did an excellent job of demolishing the points made by the hon. Member for Bromley and Chislehurst. My right hon. Friend also made a positive case for the BRS. Of course, he was the architect of business improvement districts. He explained why the BRS is an important complement to the BID scheme that he drafted, rather than an idea in conflict with that scheme. He showed the irrationality of the Conservative amendment and asked why Crossrail should get the BRS and not the rest of the country. That is the Mrs. Merton question. Why do the Conservatives support and want to help transport infrastructure in a city with a Tory Mayor and not in the rest of the country? The answer, of course, is obvious.
	I thought, in a non-patronising way, that the hon. Member for North Cornwall (Dan Rogerson), who speaks on behalf of the Liberal Democrats, made a grown-up and sensible speech. It was very good— [ Interruption. ] May I add that I am not being patronising? He articulated the folly of a Member voting against giving the Bill a Second Reading if they are in favour of Crossrail. He made the point that if the Conservatives were successful—God forbid—in the vote tonight, there would be no business rate supplement and no Crossrail. He made the point that grown-up politicians would make any objections clear in Committee and would come back to them on Report and on Third Reading.
	Let me answer the hon. Gentleman's specific point about having an element of the uniform business rate subject to local control. The Lyons inquiry, to which he alluded, considered the case for returning business rates to local control. Its analysis was that that would not be appropriate at this time. Instead, it recommended introducing a new local power to set a supplement on the current business structure, and that is what we are doing with the Bill.
	My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) made an interesting contribution to the debate. He talked about the benefits of a business rate supplement outside London and also articulated some of the problems with the current system. He is hoping that a business rate supplement will alleviate some of the problems that he articulated. He referred to the recent problems with Waterford Wedgwood, which I think happened in the constituency of my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher), and to how the BRS could be a tool for local government to help infrastructure in various parts of the country.
	I come now to the comments of the hon. Member for Northampton, South (Mr. Binley)—where do I begin? His speech was a 32-minute tour de force. It was a speech that was interesting. He referred to the fact that he had spent two and a half years considering a Bill on Crossrail. If he supports his party in voting against Second Reading tonight and succeeds, those two and a half years will have been wasted. Crossrail simply cannot happen within the necessary time scales unless we get the scheme on the road. He made the point that his local Indian restaurants would suffer if the Bill were passed—I am not sure why. He will be aware that 91 per cent. of businesses around the country will not be affected, but if he has any particular problems and if any local restaurants suffer, I would be happy to visit his constituency, to visit the restaurant, to have a meal and to deal with the points that might be raised. I am not sure whether to say that I look forward to his being a member of the Public Bill Committee and to our having a ding-dong in Committee.
	The hon. Member for Ilford, North (Mr. Scott) made a good speech. He explained that he was in favour of Crossrail. Once again, he will need to decide whether he can have his cake and eat it. If he votes against Second Reading, he cannot be in favour of Crossrail. He spoke in favour of BIDs and he will be aware that, as we were reminded, his party opposed BIDs when they were first introduced. I look forward to his being a member of the Public Bill Committee.
	The hon. Member for Cities of London and Westminster, who should have declared an interest as a huge beneficiary of the Bill, has a problem. In one breath, he talked about its being a less opportune time for a business rate supplement, but he went on to say that, if there was a delay, that would send the wrong signal to businesses and show a lack of confidence in the City. He cannot have it both ways. If he wants Crossrail to happen and wants London to benefit from it, he needs to decide which way he is going to vote tonight.

environmental audit

tax rewrite bills (joint committee)

That Mr. Siôn Simon be discharged from the Treasury Committee and John Mann be added.— ( Rosemary McKenna, o n behalf of the Committee of Selection. )

Charles Walker: It is a great privilege and honour to move the first Adjournment debate after the Christmas recess. I welcome the Minister to his place. I had the great pleasure of working with him when I served on the Public Administration Committee and he was the Minister for the third sector. He took a great deal of interest in the work of our Committee and he always listened and was always helpful. I hope he will be equally helpful this evening.
	I had the great honour and privilege of serving on the Mental Health Bill in 2007. The Bill has now become an Act and its measures came into force on 3 November 2008. Many parts of the Act were welcomed by all sides of the House. However, some parts of the Act caused many Members on all sides of the House great concern. The Act contained significant powers to detain and treat people against their will. Many of us in this place were concerned about that. The Act also incorporated safeguards in the form of independent mental health advocacy that would ensure that people who were being detained against their will or faced being detained against their will for mental health problems could receive the support of an independent advocate. That is crucial.
	When someone has a mental illness and has an episode that requires or may require their detention, their liberty is removed and their freedom of movement is restricted. Some people are committed to secure hospitals. Others are subject to community treatment orders which restrict their liberties and freedom of movement in the community. The role of the advocate is to support those people in their dealings with health care professionals. Someone having a mental episode may be extremely bewildered, upset and frightened. They get a great deal of information, some of which they do not agree with and much of which they may be hostile towards. They can feel very alone and isolated.
	The role of advocates is to stand and sit by that person and to ensure that they understand as far as possible their rights under the Mental Health Act 2007—their right to say no and to question the treatments and recommendations proposed by health care professionals and clinicians. That is a hugely important part of the Act.
	Let us turn for a moment to our criminal justice system. When defendants before the courts face losing their liberty, we have a robust legal system which ensures that they get proper representation, that their interests and concerns are given a proper hearing, and that their side of the story is put. It is just as important that people who face being incarcerated and having their liberty removed as a result of a mental health episode have the same level of professional representation—people who go in to bat on their behalf.
	As I said, the Act came into force on 3 November 2008. However, the part of the Act dealing with mental health advocacy is not due to come into force until 1 April 2009. That creates problems, which I should like to explore with the Minister for a few moments. We are about 10 and a half weeks away from the go-live date, but the commissioning of these services by primary care trusts has only just got under way.
	On 16 December, just before the House rose for the Christmas recess, the Minister made a helpful statement about how the tendering process would commence. However, today is 12 January and we have just over 10 weeks to get the services in place. Tendering and commissioning is a complex process that requires thought and time. Organisations such as the NHS Confederation, Mind and Rethink are concerned that the tendering could be rushed and that solutions that do not best fit the needs of mental health patients will be put in place. We need to be alive to those concerns.
	One of the fears is that because of the short space of time for putting out a tender and commissioning the services, the process may favour large, national providers. As the Minister will know from his time as Minister with responsibility for the third sector, I had a concern about such providers squeezing out good, locally based advocacy providers. Large, national providers have large infrastructures and experts within their tendering teams who can quickly put together and present a complex tender. They may be good advocacy providers; I do not doubt for a minute their ability to deliver the service. However, we must ensure whenever possible that established local groups get the chance—or perhaps are prioritised—to deliver the services. Such organisations are rooted in communities and have a track record of success. I hope that the Minister will give PCTs further guidance on how to ensure the outcome within 10 and a half weeks from the go-live date.